Amazon Stock Fell After Earnings. Jim Cramer Says Buy Right Here
Amazon’s latest earnings report spooked the market, but Jim Cramer sees something in the numbers that most investors are missing. Whether he is right depends on a few critical signals buried beneath the headline misses.
Amazon (NASDAQ:AMZN | AMZN Price Prediction) shares dropped after its third-quarter earnings report, and Jim Cramer used the selloff to make his case. On October 30, the CNBC host said: “I think that Amazon should be bought right here, because before people realize that it remains one of the best companies in the entire world, I like to say there’s always a bull market somewhere.” In the hour after the filing, the stock fell from $253.82 to $229. It recovered part of that drop and closed the next session at $240.35, down 1.41%.
Why the Market Sold the Headline Numbers
Revenue of $201.94B came in just under the $202.20B estimate. EPS of $1.89 also missed the $1.96 consensus. Fourth-quarter guidance of $240.0B to $247.0B in sales fell below estimates at the midpoint, according to Wall St. Engine. Spending added more pressure.
Capex reached $77.26B in the quarter, and the full-year guide stands at roughly $ 220 B. Management also said it expects to spend meaningfully more in 2027. That spend goes to the power, cooling, and networking suppliers behind the data centers, which we rounded up in a free AI infrastructure report. As a result, trailing free cash flow is an outflow of $42.4B.
What Cramer Likely Sees Underneath
Cramer’s point about people realizing Amazon’s quality comes down to this: the headline misses hide a better business. The EPS comparison was up against a year-ago quarter that included $9.5 billion of pre-tax profits from Anthropic. Operating income moved higher. It rose 61.15% to $28.08B, and the 13.9% operating margin was Amazon’s highest ever. You can see the full breakdown in the company’s earnings release filed with the SEC.
AWS drives most of the positive case. Revenue rose 39.3% to $46 billion, its sixth straight quarter of faster growth, with a 38.7% operating margin. The backlog reached $578 billion. CEO Andy Jassy forecast AWS growth above 40% in both 2027 and 2028, adding: “We have very good visibility into 27 and 28 and some of 29 too with respect to what customers want in those really big chunks of capacity.” Token volume on Bedrock, AWS’s AI model platform, rose nearly 17 times year over year.
Retail profits are climbing too. North America operating income rose to $8.72B from $4.79B. Moving Prime Day into the second quarter cut about 400 bps from third-quarter retail growth, and management expects advertising growth to return to the high teens in the fourth quarter.
Valuation Looks Cheaper Than the Headlines Suggest
Amazon trades at about 34 times trailing earnings. Based on the 2027 consensus EPS of $10.5527, the forward multiple is roughly 23x. The 2027 estimate has received four upward revisions and one downward revision over the past 30 days. After the report, UBS (NYSE:UBS) raised its price target to $352 from $348, citing the AWS outlook. Still, the stock is up only 4.13% this year.
Risks That Could Delay the Payoff
Capital intensity is the main problem. Before the report, UBS analyst Stephen Ju said investors were concerned that 2027 capex could exceed $300B. Borrowing costs are rising as well: interest expense reached $1.691 billion, compared with $538 million a year earlier. Management also noted memory chip supply volatility, tariffs and currency swings. History adds a caution. After both of its two prior earnings reports, the stock still fell over the following thirty days.
Verdict for Long-Term Investors
For investors with a multi-year horizon, Cramer’s argument rests on measurable trends. AWS growth is speeding up and supported by a large signed backlog, operating margins are at a record, and the forward multiple is reasonable. The trade-off is patience. Free cash flow will likely stay under pressure through 2027 while Amazon builds out AI capacity.
Watch three things next: whether AWS growth reaches the promised 40% level, whether fourth-quarter operating income lands inside the $28.5B to $33.5B range, and how large the 2027 capex number turns out to be.
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